It’s a big moment in anybody’s life when the time comes for getting your first car. It’s also a big moment when your teenager needs a car of their own.
Buying a teenager’s first car is somewhat different from a car you buy for yourself. For the average family, it can be a bit of a thorny issue, with lots of questions that need to be answered before you all head down to the car yards.
Even if you are in a financial position and/or have the inclination to buy your teenager’s first car and give it to him or her as a gift, there are still issues to be worked through. The average teenager has no idea of the costs involved in running a vehicle. OK, he or she sees Mum and Dad putting in petrol and maybe doing the odd repair, but a lot of this just doesn’t get noticed. Parents have the responsibility of making sure that a teenager is prepared for this so a nasty reality slap doesn’t come once he or she leaves home and suddenly has to foot all the bills.
Because it is wisest to let your teenager pay for at least some of the running costs of the car, if not all of them, your teenager needs to have some form of income. Pocket money and grandparents don’t count; paper runs, mowing lawns and babysitting do. You may also need to give them some budgeting advice so they don’t suddenly find themselves short if the car needs new tyres.
First of all, you will need to sort out how to purchase the car. Are you going to get out a loan for the car? Who is going to make the repayments you or your teenager? Or are you going to split the repayments? How much of the purchase price of the car are you willing to fund and how much will your son or daughter have to produce? There aren’t any right or wrong answers here. You may want to buy the car as a gift, or you may allow your teenager to get a no-interest loan from the National Bank of Mum and Dad, which they can pay off as time goes by.
If a loan is needed to purchase the car (and this can be a good idea to ensure that your teenager’s first car isn’t a cheap dunger that breaks down half the time and incurs nasty repair bills), then it can be easier for the parents (who usually have stable jobs and a better credit history) to take out the loan themselves and arrange a sort of within-family novated lease. If a loan is necessary and your teenager needs a car in order to travel to their new job (e.g. because it’s too far to walk to that workplace and/or taking public transport would involve travel at hours when it’s not prudent for a young person to be on the streets), then this sort of arrangement can be a smart option.
You also need to negotiate who’s going to pay for what. There is insurance, fuel, repairs, registration and all those other ongoing costs to be taken care of. Smart parenting sense suggests that these bills should not be automatically taken care of by the parents: teenagers need to learn some responsibility. However, there is some room for negotiation rather than just insisting that your teen take on the responsibility as well as the pleasures of car ownership. Parents may want to take care of third-party insurance, for example. Or parents may contribute towards fuel and other running costs in exchange for certain favours (e.g. if your teenager uses the car to run errands for you).
Take the time to talk it through and to educate your teenager about what it means to own a car and what it takes to run it. He or she might then decide on some other option for transport until they’re in a better financial position.